3/14/2013

HMY has taken a bit of a beating as of late, most recently from a George Kesarios in his article, Mining Stocks to Avoid over on Seeking Alpha. It’s not usually a good thing when your holdings get mentioned over there. At least not when my holdings get mentioned over there since they do typically upset the apple (or gold, or battery) cart when they start writing. I can’t say that I can take issue with George’s assessment. Heck, look at the long term chart and you will see a decline in price over the past several years. But what I still see fundamentally is a company showing positive earnings per share and real cash in the form of dividends (I’m not a huge dividend investor, but it’s nice to be “paid to wait”) It has a price to earnings ratio of 10 and that usually tells me that it’s not overpriced – I try to stick with a P/E below 20.

Kesarios states that he believes that Harmony Gold, along with others, failed to cash in on the huge run up in gold pricing (and look at their long term chart – he’s kinda right) and gold is going to completely collapse soon. Whether the gold hoarders or doomsday preppers are done collecting all the gold they ever want is hard to say. Look around. There are so many places here that are buying gold that we could be at the top of the bubble – Warren Buffet says be fearful when others are greedy – or we could be at the start of another run.

I’m holding 300 shares of HMY. I’m expecting the price to go to $7.20 as I posted before, but if it doesn’t happen within the next two to three months it will be time to start looking at selling the calls. Enough calls over enough time recoups the investment and produces a little bit of cash flow, but it also means I’m holding these for a year. I don’t see a total melt down of this stock like happened with ABAT, but one can clearly see an article on Seeking Alpha gets read by a lot of people and prices are definitely affected when they beat it with their keyboards.

I have HMY in my account. Yes I will be holding it until I get the $7.20 price, decide that I can’t wait any more and adjust my price, or collect call premiums for the next year or so. Don’t copy me, you could do just as poorly. This is what I’m doing in my own account. This is for entertainment and educational purposes only. Do your own research and due diligence.